Durham County leaders balance school boost and nonprofit cuts while updating budget ordinance

Durham County commissioners and county staff met in a June 3 budget work session to refine an ‘‘add-delete’’ budget list, propose changes to the county’s budget ordinance and identify how to provide $2.57 million in additional local funding for Durham Public Schools (DPS) without increasing the property tax rate beyond the manager’s recommendation.

County Manager Claudia Hager and budget staff presented a plan that would add $2,570,000 to DPS on top of the $10,350,000 in local support in the manager’s recommended budget and keep the tax rate at the manager’s recommended level. Hager summarized the adjustments as a combination of reduced capital allocations, contingency cuts, modest revenue increases and an appropriation of fund balance to close a remaining gap.

Why it matters: commissioners said they wanted to find ways to increase school funding while avoiding an additional tax increase. The discussion also included proposals to reduce or reallocate one-time county support for community partners and to change the county’s internal approval thresholds and reporting requirements in the budget ordinance — items that affect how quickly staff can execute contracts and move appropriations during the fiscal year.

Key funding moves discussed

- Durham Public Schools: Staff proposed giving DPS an additional $2,570,000 ‘‘on top of the 10,350,000.00 that the manager recommended,’’ to be paid for without increasing the tax rate beyond the manager’s recommendation. The board discussed multiple offsets to cover that amount.

- Capital reallocation: The county would reduce the recommended recurring capital allocation to DPS from $6,000,000 to $5,000,000, freeing $1,000,000 toward the DPS increase. Budget staff said the PAYGO/LOBs (locally funded capital) authorities and other revenue streams (ARPA, lottery) should still allow DPS to address urgent climate-related repairs and planning needs.

- Hayti Reborn/JM (community organization): Hayti Reborn had requested $1,500,000 (presented as $500,000 for operations and $1,000,000 for program expansion). The county manager’s recommended budget had included $1,000,000. The working proposal under discussion would retain $500,000 for Hayti Reborn’s operational needs and use the other $500,000 to help offset the DPS increase. Commissioner discussion included objections and requests for performance measures tied to ongoing funding.

- Contingencies and smaller savings: Proposed reductions included cutting the county manager’s contingency from $200,000 to $100,000 (saving $100,000) and reducing the commissioners’ contingency from $100,000 to $50,000 (saving $50,000). Budget staff also proposed increasing the interest income estimate by $300,000.

- Fund balance: To close the remaining shortfall identified in the add-delete exercise, staff recommended appropriating about $425,000 of fund balance. Taken together, staff said, these changes would ‘‘get us into balance paying for the $2,570,000 largely for schools without a tax rate increase.’’

Alliance Health and the MOU for DPS services

Commissioners questioned whether funds budgeted for Alliance Health that had not been spent could be reallocated. Budget staff explained Alliance’s current-year expenditures are lower because of other revenue (Medicaid expansion) and that unspent local dollars would be carried forward; staff said Alliance’s budget would be reduced to $4,500,000 to reflect historical patterns but that some unspent dollars would be held to support DPS and other partners. County staff said a memorandum of agreement (MOU) between the county/Alliance and DPS for the services is close to final and that services are scheduled to begin early in the next fiscal year. As County Manager Hager put it: "the agreement is close to being finalized, and we'll give the board an update on that status." (manager Hager)

Commissioner responses and requests for metrics

Several commissioners urged stronger performance measures and clearer accountability for nonprofit funding. Vice Chair Dr. Lee said he opposed trimming $500,000 from Hayti Reborn and urged outcomes-based conditions: "I don't... agree with the reduction of $500,000 from Haytai, reborn," and proposed that, if funded, the organization should have a fundraising requirement (for example, raising $250,000) and demonstrated capacity-building tied to future county support. Other commissioners said they supported the goal of avoiding a further tax increase and emphasized the need for standardized program metrics and cross-jurisdictional coordination with the city.

Proposed changes to the budget ordinance

Budget staff walked the board through a set of ordinance edits intended to modernize thresholds and reduce routine agenda volume by letting the county manager (or a designee) approve certain transactions below new higher thresholds, with follow-up reporting to the board. Highlights of the proposed changes included:

- Transfers: increasing the threshold for manager-authorized transfers between functions within a fund to $100,000 (previously $20,000), with subsequent reporting to the board.

- Contracts and leases: raising the county manager’s signature authority for routine leases and professional/maintenance/service contracts to $100,000 (compared with prior thresholds of $15,000 for leases and $40,000 for many contracts). Staff said contracts and emergency repairs often exceed prior thresholds and that higher limits would speed procurement and reduce administrative delay.

- Designee authority: adding explicit ordinance language allowing the county manager to designate another official to sign in the manager’s absence.

- DSS and Public Health contracts: clarifying statutory delegations for certain Social Services and Public Health agreements already governed by their boards.

- DPS reporting: adding language requiring Durham Public Schools to "reflect local appropriations by purpose and function" and to notify the county if cumulative amendments would increase or decrease county appropriations by a specified threshold (the working text uses a 15% cumulative threshold). Staff and legal counsel said the county has reporting authority under state law and that the proposed requirement mirrors practices in other large North Carolina jurisdictions. As one staffer explained, the change is intended to improve communication, not to micro-manage day-to-day school accounting: "We're trying to balance how much mundane technical work you all have to approve versus trusting the manager to identify and you weigh in with your approval, that numerical amount." (Keith Lane, Budget Director)

Legal and oversight points

County counsel and staff briefed commissioners that the board may lawfully require reporting and limit shifts of county-dedicated funds down to the purpose or function level under state law. Staff and commissioners requested benchmarking data (how other counties and the City of Durham handle similar thresholds and reporting) and asked that DPS provide a translated table showing how the local appropriation would appear in the state-required purpose/function accounting format, including the additional $2,570,000 under consideration.

Next steps

Budget staff said they will draft ordinance language for the board to consider and will return with benchmarking data and the DPS table showing local appropriations translated to state purpose/function codes. The board scheduled final action on the budget ordinance and adoption at the upcoming Monday meeting. Staff told commissioners they will provide an update on the Alliance MOU and additional backup documentation requested by commissioners.

Ending: the work session concluded with commissioners and staff thanking the budget team for the multi-day effort and reiterating that the proposal aims to increase school funding while keeping the property tax at the manager’s recommended level and adding modest reporting requirements to improve transparency.